Intense Selling Pressure Hits Bitcoin Market, Maintaining Price Steadfast at $105,000 Level
Spotlight on Crypto's King: Bitcoin's Profit-Taking Frenzy
Bitcoin has been buzzing with profit-taking activity, a trend demonstrated by sudden spikes in the "Realized Profit" metric surpassing $500 million per hour, as highlighted by the on-chain analytics firm, Glassnode.
Bitcoin's Realized Profit: A Closer Look
The "Realized Profit" indicator, coined by Glassnode, calculates the total earnings generated by investors when they transfer their Bitcoin on the network. It does this by delving into each coin's past transaction history, calculating profits based on the difference between the current selling price and the prior transaction price. The Realized Profit accounts for all instances of profit-taking, while its counterpart, the Realized Loss, considers losses from transfers.
Bitcoin's Realized Profit: Entity-Adjusted EditionIt's essential to note that the version of Realized Profit presented by Glassnode is its 'Entity-Adjusted' variant. This version doesn't merely track the transfers between different wallets but also the movements between different entities. Glassnode defines an 'entity' as a group of interconnected wallets they've identified as belonging to the same investor. As a result, the Entity-Adjusted Realized Profit eliminates any redundant data derived from the same holder's wallet transactions.
Profit-Taking's Impact on Bitcoin's Price
As bitcoin's profit-taking efficiency intensified, the price dipped from an astounding ATH of over $111,000 to rally around $105,000. However, the cryptocurrency demonstrated resilience, withstanding the selling pressure and holding above the $105,000 threshold. This resilience can be attributed to the continuous influx of new capital into the market, which maintains a harmonious balance between profit-taking and demand.
Additional Insights
- Whale Activity: Since 2017, large Bitcoin holders have been liquidating their assets at a steady pace. These sell-offs mostly involve whales who acquired their Bitcoin at lower prices ranging from nothing to $700 and have since been holding onto their investment.
- Capital Inflows: Bitcoin's Realized Cap has soared to a new ATH above $900 billion due to persistent capital inflows, showcasing persistent investor interest and enthusiasm.
- Future Trends: The near-term outlook foresees intermittent price consolidation as profit-taking matches investment inflows. Analysts anticipate that the $105,000 level may serve as a crucial support zone. Long-term predictions suggest Bitcoin could potentially reach price levels of $180,000 to $250,000 by 2025. Lastly, the heightened profit-taking may trigger tax implications for investors, particularly those who bought Bitcoin within the last year and are liable for ordinary income tax rates.
In A NutshellIn essence, the recent upsurge in Bitcoin's profit-taking activity, led by mature market participants, indicates ongoing bullish sentiment for the future. As capital inflows persist, investors continue to test Bitcoin's resilience amidst the intense profit-taking wave.
Investors have been generating substantial profits from Bitcoin transfers, as shown by the 'Realized Profit' indicator developed by Glassnode, which calculates earnings by delving into each coin's past transaction history and accounting for the difference between the selling price and prior transaction price.
The 'Entity-Adjusted' variant of Realized Profit, utilized by Glassnode, takes into account not only transfers between different wallets but also movements between different entities, eliminating redundant data from the same holder's wallet transactions.
